7 Things Every Business Should Prioritize In Each New Calendar Year
The priorities for a business for any new calendar year may differ from another. However, it is noteworthy some activities should be a priority for every business for any new year, irrespective of the size or nature of business. In each new calendar year, there are 7 things every business should prioritize. These form the basis for this article. Find them below:
- Stocktaking/Inventory count
Stock or inventory refers to the things that a business buys or manufactures and either uses for its operations or resells. Stocktaking is the physical counting of your stocks. This is important for the following reasons:
- Gives you an idea of the quantity and value of closing (remaining) stock to start the year with
- Helps you to identify obsolete, damaged, expired or stolen stock
- Facilitates tracking of fraudulent activities by staff or storekeepers, among others.
- Debtors/Receivables check-up
Debtors refer to individuals and institutions who have received your products on credit and therefore must make payments to you. It is crucial to check up on them to know whether such debts would be repaid or not. This will help to know the number of debts to write off from your books and those to retain. One way of facilitating this is to keep an accounts receivable aging report. This report gives an idea of customers whose debts are long overdue.
- Closing of accounts/books and financial statements preparation
It is required by law for businesses to furnish relevant statutory bodies such as Ghana Revenue Authority and Registrar General’s Department with their financial statements in each new year. Consequently, you must endeavor to close your books and get all relevant financial statements prepared. For companies, these statements must be audited. Failure to do this can result in severe sanctions which could have been avoided had you done the audit. You also get the peace of mind to carry on with your business.
- Renewals and submission of returns
Again, the laws of Ghana require businesses to file their annual returns with the Ghana Revenue Authority and Registrar General’s Department each year by 30th April. For 2020, due to the COVID-19 pandemic, an extension to file returns has been given to 30th June. Moreover, businesses of all sizes and nature are expected to renew their registration with the Registrar General’s Department. As mentioned before, compliance with this saves you from penalties and fines or possible business closure.
- Proper file management and data backup
It is very important to consider efficiently managing your records and keeping them safe. Both hard and soft copy files must be properly kept using efficient filing techniques. When this is done, it becomes easier to store all the data (both soft and hard copies) for the past period and make plans for those to be obtained in the new year.
It is worth celebrating success. It encourages more of it by empowering those who achieved it and even those who did not. As a business, you should consider and reward employees who sacrificed and showed diligence in the past year. This should be done in a way that encourages all staff and does not in any way create strife or perceived to be discriminatory.
Budgets are financial plans for forthcoming periods. They show what expenses are to be incurred and how funds will be generated (revenue) to finance them. They also help to prevent unplanned spending and to control how funds are expended. You can prepare a budget by listing the various expenses you are likely to incur and the sources from which you expect to generate revenue. This can be done for the whole year and broken down into monthly, quarterly and half-yearly budgets. It is vital to know that you need to periodically assess your budget against actual results and make adjustments where necessary. Thus, a good budget should be flexible to incorporate changes if need be. In preparing your budgets, it is good to consider these: Y Combinator, cash burn rate, and cash runway. Y Combinator is premised on the idea that a business should grow by 7% each week. Thus, if you made GHS1,000 revenue in a given week, you should budget to make GHS1,070 the next week. The cash burn rate is the rate at which a business spends cash. You can record your cash spending weekly, monthly, etc. and compute your cash burn rate by averaging the results for a given period. The number of weeks, months, etc. that a business’ cash can sustain its operations given its cash burn rate is called cash runway. It is computed by dividing your total cash balance by your cash burn rate.
The goal of this article has been to serve as a reminder for those already aware and as a piece of information for all businesses to keep track of their new year checklists and to remain compliant. Remember that you can always get experts to help when the need arises. Make every conscious effort to work on the above and your operations will be greatly enhanced.